Liquidity Voids

Liquidity Voids

Liquidity voids occur when price moves sharply in one direction. This is portrayed by large candles that have little trading activity as price moves in one direction. Eventually, the price will return to close the liquidity void later.

Liquidity voids represent inefficiencies in the market; either sell-side inefficiency or buy-side inefficiency. Price will later seek to close areas of inefficiencies in the market and as a trader, we anticipate trading opportunities to unfold once the inefficiencies have been closed.

How To Trade Liquidity Voids 

Liquidity voids represent inefficient in the market their purpose is to indicate where price is most likely to retrace to therefore they can not be traded alone therefore using a fair value gap or order block for entry is ideal for trading liquidity voids.

Liquidity voids are traded with order blocks and fair value gaps with a shift in market structure for directional bias. For example, if we have a sell-side liquidity void we would wait to see a bearish shift in market structure and as price is retracing to close the bearish void we will look for a fair value gap or order block within the range of the liquidity void. Traders should look for fair value gaps above the premium level of the defined range of the liquidity void.

if we have a buy-side liquidity void we would wait to see a bullish shift in market structure and as price is retracing to close the bullish void we will look for a fair value gap or order block within the range of the liquidity void. Traders should look for fair value gaps below the discount level of the defined range of the liquidity void, This should be done with your Fibonacci Tool.

Premium Levels refers to any level above 50% of your Fibonacci levels, and discount refers to any level below 50% of your Fibonacci level.

Conclusion:

Liquidity voids are part of smart money trading concepts they indicate inefficiencies in the market. liquidity voids come into form either bearish or bullish. order blocks and fair value gaps with shifts in market structure are used for entries when trading liquidity voids. These forex trading concepts that stood the test of time and have proven to have a high success rate in price prediction.